London's benchmark index starts the New Year on the back foot as miners fall

Despite all thetalk from analyststhat the FTSE 100 will surge to an all-time high this year, the benchmark index failed to make a start on a record-breaking ascent in the first trading session of 2014.

Instead, the blue-chip index began the New Year on the back foot, slipping 31.18 points, or 0.5pc, to 6,717.91 today in the wake of disappointing Chinese manufacturing data. As China is the world’s biggest metals consumer, news of weaker than expected factory output inevitably dragged on the London-listed miners, which in turn pulled the broader index lower. Anglo American fell 28p to £12.92, Rio Tinto declined 39½p to £33.70, and BHP Billiton lost 17p to £18.52.

Nevertheless, traders noted that a pause for breath by the blue-chip index was not unexpected given that it rallied strongly in the second half of December, climbing 4.8pc from a low of 6,439.96. That surge helped the index record a 14.4pc annual gain in 2013, its best since 2009. Many analysts predict the benchmark index will continue to rise this year and surpass its previous record high of 6,930.2, touched in December 1999.

Dealers also pointed out that today’s slide was in thin trading volumes as many investors are yet to return from their Christmas holidays.

Still, not every FTSE 100 miner fell, with the precious metals producers buoyed by rises in gold and silver prices. Randgold Resources advanced 144p to £39.34 and Fresnillo added 9½ to 755p. African Barrick Gold put on 11.7 to 197½p in a FTSE 250 that dipped 16.26 to 15,919.09.

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Returning to the day’s fallers, claims by Labour that energy suppliers had overcharged consumers by £4bn over the past three years weighed on SSE, down 31p at £13.39, and British Gas-owner Centrica, off 3.9 at 343.8p, the only two of the 'Big Six’ energy groups listed in London.

Mid-cap oil and gas explorer Ophir Energy slumped 26.9, or 8.2pc, to 300.9p, hurt by news its Mlinzi Mbali-1 well off the coast of Tanzania had not found oil.

But Hikma Pharmaceuticals was lifted 76p to £12.77 in the second-tier index by an upgrade to “buy” at UBS. Analyst Guillaume van Renterghem was optimistic about the earnings the drug maker will generate this year from its Doxycycline generic antibiotic, used to treat malaria. While another generic competitor may enter the market, any rival would be “incentivised to keep prices high instead of reinstating a full generic competition”, the analyst said.

“Even assuming a 40pc decrease in Doxycycline pricing in 2014, a worsening of the volume growth for the entire Doxycycline market and a significant loss in market shares for Hikma’s Doxycycline, Hikma should still be able to generate $50m-plus (£30.4m) in earnings before interest and taxes in 2014 for Doxycycline alone,” he argued.

Lower down the scale, small-cap gold miner Avocet Mining lost 8.6pc, a decline of 0.82 to 8.71p, after disclosing it had failed to repay a loan from its biggest shareholder, Elliott Associates, which matured at the end of December. Only $800,000 of interest has been paid, leaving the $15m principal amount outstanding.

The Elliott loan is secured against the miner’s Tri-K project in Guinea and so Avocet’s ownership of the project is at risk if it cannot renegotiate the financing. The company is still in talks with the investor.

Meanwhile, Kalimantan Gold tumbled ¾, or 35.3pc, to 1.375p amid disappointment that US miner Freeport-McMoRan was pulling out of its KSK copper joint venture in Indonesia and would stop funding the development.

Finally, FTSE 250 miner Vedanta Resources, off 13 at 920½p, revealed after the close that Volcan Investments, the vehicle of the company’s billionaire founder Anil Agarwal, had lifted its stake in the group to 66.93pc through the acquisition of 201,823 shares.